Knowledge that Transforms

The purpose of this JIBS editorial is to outline the vision and mission of the new JIBS Societal Impact Advisory Committee (SIAC). We define “societal impact” as research that has potential effects outside academia, for example, on communities, economies, environments, and other actors. We propose that societal impact is especially important for international business (IB) research but also particularly challenging, given the cross-national dimensions of IB and the differing social, economic, and political preferences faced by MNEs across the contexts in which they operate. We reference the Responsible Research in Business and Management (RRBM) movement and other professional association initiatives as potential sources of inspiration and guidance for understanding the societal impact of IB research generally and the vision and mission of the SIAC in particular. We outline some implications for IB scholarship to improve its societal impact and conclude by describing SIAC’s roles and responsibilities as related to JIBS authors, editors, reviewers, and the broader IB scholarly and practice communities.

We hypothesize that foreign direct investment (FDI) benefits female entrepreneurs in developing economies through a “social demonstration effect,” namely, by exhibiting norms and practices supporting gender equality and promoting women’s role in business. Results based on data from 44,418 firms in 91 developing economies show that, at the country level, increased employment share of foreign invested firms has a positive association with women’s entrepreneurship, namely, it boosts the presence of female leaders in new ventures and small businesses, as foreign firms help break local conventions unfavorable to female entrepreneurs. This positive impact is more evident when women face greater institutional barriers. However, at the industry level, foreign employment share becomes nonsignificant, and it has a negative association with the presence of female entrepreneurs in countries where women face greater barriers. We reason that this is due to occupational competition: The more disadvantaged women are in a country, the greater the advantage foreign firms possess in attracting women to work for foreign firms instead of pursuing their own entrepreneurial opportunities. The practical implication of our study is that governments can reformulate FDI policies with a view to fostering women’s entrepreneurship.

International diversification is a fundamental pillar of multinational corporations’ (MNCs) growth strategies. Consequently, there is a considerable body of research on the performance implications of MNCs’ international diversification strategies. We extend this literature by adopting a relational view where we compare the diversification profiles of firms in an inter-organizational context. We argue that the relative characteristics of firms’ and their partners’ diversification profiles is an indicator of parties’ resource bases and thereby can explain if and when inter-organizational ties yield optimum performance outcomes. We examine these relative characteristics and propose a conceptual refinement by differentiating between the degree and content dimensions of international diversification. Analyzing data from 202 manufacturing firms from the S&P 500 list, we find that firms achieve optimum performance when their partners have moderately higher degrees of international diversification and a moderate overlap of presence in foreign markets.

Breaches of corporate social responsibility (CSR) in global value chains (GVCs) pose a managerial challenge for multinational enterprises (MNEs) and threaten both their reputations and global sustainability. While an MNE-centric perspective on these issues has dominated existing international business research, we show that a dynamic view of bargaining among actors in the GVC can yield novel insights. We draw on coalitional game theory and develop a model where an MNE collaborates, monitors, and negotiates prices with a supplier whose CSR breaches may be revealed by the MNE, external agents, or remain hidden. Our model illustrates how MNEs may face a hold-up problem when irresponsible actions by suppliers are made public, and the suppliers have the power to engage in opportunistic renegotiation. Interestingly, we show that greater monitoring by MNEs, if not combined with specific strategies, can have negative consequences by weakening the MNE’s bargaining position and, in some cases, even prompting more irresponsible actions by the suppliers. Our model advances international business research on GVC sustainability and has important implications for managers and researchers alike.

Event studies are widely used in finance research to investigate the implications of announcements of corporate initiatives, regulatory changes, or macroeconomic shocks on stock prices. These studies are often used in a single-country setting (usually the U.S.), but little work has yet been conducted in an international context, perhaps due to the complexities inherent in implementing cross-country studies. This paper explores the methodological challenges of conducting event studies in international finance research. We emphasize how scholars should choose an event, select the study period (short vs. long term), estimate abnormal returns, infer statistically whether the event under consideration produces a reliable price reaction, and explore the role of formal and informal institutions in explaining cross-country differences in price reactions. We also provide an extension of event studies to an important but less studied asset class in an international setting – the fixed-income market. We conclude by offering practical recommendations for researchers conducting cross-country finance event studies and identifying opportunities for future research. Given the increasing number of global events, such as the COVID-19 pandemic, Brexit, and the Paris and Trans-Pacific Partnership agreements, we believe our paper is especially timely.

We review and bridge the literature on the internationalization of state-owned firms and sovereign wealth funds to provide a novel understanding of how government ownership affects foreign investments in three ways. First, we explain how state-owned firms and funds behave differently from private ones because they need to balance governments' nonbusiness objectives and firms' business goals. This results in competing predictions on whether government ownership helps or hinders internationalization due to particular nonbusiness objectives. Second, building on the review, we provide suggestions on how to extend research topics and theories of the firm by incorporating these nonbusiness objectives in the internationalization decisions in four areas: home government's endowments, characteristics, and attitudes; host-country expansion's support, influence, and impact; home- and host-country relationship conflicts, mediation, and disguising; and management's orientation, opacity, and arbitrage. Third, we capture how governments may use state-owned multinationals and sovereign wealth funds to nudge host-country governments by introducing the concept of discreet power and the use of four strategies (recognition, values, development, and supremacy) to achieve it. This helps to outline the beginning of a unified approach to how governments use their foreign investments to achieve nonbusiness goals. Supplementary Information: The online version contains supplementary material available at 10.1057/s41267-022-00522-w.

Migration is increasingly viewed as a high-priority policy issue among politicians, intergovernmental organizations, NGOs, and civil society throughout the world. Its implications for the private sector, for economic prosperity, and for the cross-border activities of firms are undeniable and likely to grow in importance. Yet, despite its relevance to International Business, treatment of migration in the mainstream International Business literature has been limited. In this contribution, we set out key aspects of migration that are germane to International Business. Specifically, we suggest recent migratory shifts are transforming important elements of the context in which multinational enterprises operate, with significant implications for their international human resource management practices, for firms' entry modes and market selection approaches, and for the manner in which international strategies are formulated and implemented. We offer a research agenda to motivate International Business scholars to study global migration in more depth and to reevaluate the generalizability of aspects of their theories in light of developments in global migration.

International joint ventures (IJVs) have become an important source of critical knowledge for multinational enterprises, but little is known about how knowledge can be effectively transferred to parent firms when the potential for interpartner opportunism still exists. Drawing on attachment theory, we study how boundary-spanning commitments to IJVs may help mitigate interpartner opportunism and facilitate effective knowledge transfer to parents. Specifically, we argue that knowledge transfer from IJVs to their parents is positively mediated by both boundary spanners’ organizational commitment to IJVs and parent firms’ resource commitment to IJVs. We test our arguments using survey data collected from 600 dyadic Chinese–foreign managers of 100 IJVs established in China. The results provide evidence that knowledge sharing between boundary spanners in IJVs positively affects their organizational commitment to these IJVs, which in turn positively affects knowledge transfer to parents. Similarly, knowledge sharing between such boundary spanners positively affects parent firms’ resource commitment to IJVs, which in turn positively affects knowledge transfer to parents. The mediating role of boundary spanners’ organizational commitment is stronger than that of parent firms’ resource commitment. Collectively, our findings suggest that commitment-based relational mechanisms are imperative for safeguarding effective knowledge transfer from IJVs to parent firms.

Subsidiary closures and relocations, a process whereby a multinational enterprise (MNE) closes down a subsidiary and relocates its activities, are commonplace and increasing. Yet we lack an understanding of how knowledge in such situations can be successfully transferred to prevent loss and provide for future knowledge recombination in the MNE. Compared to periods of normal operation, knowledge sharing during subsidiary relocations is likely compromised by diminished sender motivation. In a detailed case study of a subsidiary closure and relocation, we find that the announcement of a subsidiary closure can lead to a break in cooperative behavior that inhibits knowledge transfer. It is therefore critical to reinstate cooperative behavior among subsidiary employees. Reinstatement can be achieved through a set of subsidiary leadership practices that affect the emotions of employees and subsidiary identity. This finding contributes to our understanding of knowledge transfer dynamics in MNEs during subsidiary relocations and closures, extends theory on the practices of subsidiary leadership in subsidiary death and adds to our understanding of identity in MNEs.